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Sunday, September 14, 2008

World Bank to finance Zambia power projects

The World Bank, Sweden and Japan will jointly finance Zambia's $100-million power upgrades and expansion projects intended to shore up economic activity, a senior Bank official said on Friday.

Kapil Kapoor, country manager for Zambia said the board had already approved financing for power projects aimed at upgrading infrastructure to boost supply and distribution.

He told Reuters in an interview that the World Bank would provide 25 percent of the $100-million in a loan that has less than 1,0 percent interest while Japan and Sweden would give the rest in grants.

"The country faces many challenges in energy and it needs to improve the capacity to meet demands of the economic sectors."

"We have signed with the government after the board approved the project to increase access to power and to help improve transmission and bring more people on the national electricity grid."

A portion of the funds would be used to buy solar panels, energy saving bulbs and equipment in a bid to save power for productive sectors of the mineral-rich country, he said.

Kapoor said a rural electrification project the government started a few years back would also be financed from the funds.

He said the Bank's financing arm, the International Finance Corporation had started a feasibility study at the $1,5-billion Kafue Gorge Lower power project that will generate 750 megawatts of electricity mainly to the copper mines.

"The feasibility study might be ready at the end of the year, but you cannot be absolutely sure about studies and it could be early next year. The feasibility advice is looking at the whole project," Kapoor said.

Like many countries in southern Africa, Zambia has a power shortage due mainly to increasing mine production, and higher domestic consumption. It only has 1 250 megawatts out of the 1 400 needed for peak demand, forcing the state power utility to ration electricity.